JONATHAN RUSCH, Special Counsel for Fraud Prevention,
Criminal Division, U.S. Department of Justice

JOHN TULL, Commissioner, Commodity Futures Trading
Commission

P R O C E E D I N G S

GENERAL RENO: Good afternoon.

Today I am pleased to announce the most extensive
operation ever directed at telemarketing fraud, Operation Double
Barrel. For the past two and a half years, Federal law enforcement,
State attorneys general, and Federal regulators have been
collaborating to combat telemarketing schemes. The operation
combines sophisticated investigative techniques, joint training of
Federal and State law enforcement, and coordinated prosecutions.

The goal was to have maximum impact on telemarketing
fraud. It did. As we speak, agents are arresting more than 40
individuals and effecting some 20 search warrants around the country.

But these numbers only scratch the surface. Since it
began in July 1966, Operation Double Barrel has produced tremendous
results. Nearly 800 individuals have been charged with Federal
crimes and nearly 200 others have been charged with State crimes. In
addition, another 400 telemarketers have been sued in civil actions.

Dishonest telemarketers are very, very efficient. Rather
than calling just anyone, they purchase lists of individuals who were
previously victimized by telemarketing fraud. Then they call the
victims to see if they'll fall for a scam the second time.

In some cases the telemarketer pretends to be an officer
of the law, offering to recover the money that the victim previously
lost. Of course, in the scam the victim has to pay a fee.

But over the years we've been obtaining those same phone
lists, and in Operation Double Barrel when the telemarketers called
we have oftentimes answered. As the tape recorder ran, FBI agents,
State authorities, and specially trained members of AARP posed as
potential victims recording the crime. The tapes were then handed over to Federal and State law
enforcement, Federal regulators, and even foreign law enforcement for
possible action. To date, our telemarketing efforts have produced
more than 12,000 tape recordings of telephone calls by dishonest
telemarketers.

In addition to the undercover effort, telemarketing
experts trained Federal and State law enforcement authorities on how
to investigate and prosecute telemarketing schemes, and Federal and
State authorities worked together to coordinate their prosecutions.

Operation Double Barrel represents the highest level of
cooperation between law enforcement authorities to combat
telemarketing fraud, and I'm so pleased by what it has produced. The
operation involved 20 U.S. Attorney's offices, 21 FBI field offices,
and 35 State attorneys general.

With us today is one of my colleagues, Thurbert Baker,
the Attorney General of Georgia. And I want to welcome you to the
Department of Justice and to acknowledge the great working
relationship that exists between the State Attorneys General and the
Department of Justice, one we value greatly, sir.

MR. BAKER: Thank you, Ms. Reno.

GENERAL RENO: I'm also joined by representatives of
other Federal enforcement agencies that have played such a crucial
role: Ted Jackson, Deputy Assistant Director of the FBI; Lawrence
Maxwell, the Inspector in Charge of the Postal Inspection Service;
Sheila Anthony, a Commissioner of the Federal Trade Commission. Has
Mr. Carey arrived?

VOICE: Yes.

GENERAL RENO: Paul Carey, a Commissioner of the
Securities and Exchange Commission; and John Tull, a Commissioner of
the Commodity Futures Trading Commission.

Especially I would like to welcome Tess Canja, who's the
President-Elect of the AARP, and thank you for being here, for AARP
has been so very helpful, not only assisting with the investigation,
but doing so much to help educate the public to prevent these scams
in the first place.

Today's announcement grew out of another telemarketing
operation that I announced in 1995. That effort, called Operation
Senior Sentinel, was the first Federal operation where agents and
senior citizens worked undercover to record the sales pitches of con
artists. There were State officials involved in that as well, and
that was so very important.

Today's operation is a massive expansion, involving more
prosecutors, more enforcement agencies, more States, and more
resources than ever before. Operation Double Barrel has taken aim at
these ruthless telemarketers who seek to reach out and con you, the
people. Now each time telemarketers pick up a phone they are taking
a risk.

The cases we've heard about are truly shocking. One
particularly compelling story involved a telemarketer in Buffalo who
went to great lengths to get his victim to send him some money. The
telemarketer would call an elderly victim who'd been conned before by
other telemarketers. On the call the telemarketer would pretend to
be an FBI agent. He would tell the victim he wanted to wiretap the
victim's phone to catch a known telemarketer engaged in a fraudulent
scheme.

To pull this off, he would even make up a phony court
order to authorize the wiretap and send it to the victim.
Thereafter, the phony telemarketer would call back using a different
voice and pretend to be the other. As the other, he would tell the
victim that he'd recovered the money from her previous losses and
would send it to her for a 10 percent fee.

Then the telemarketer would make a third call, posing
again as the FBI agent. This time the FBI, the would-be FBI agent,
would encourage the victim to go ahead and send the money to the
telemarketer so that they could catch this fraudulent telemarketer
red-handed.

The telemarketer's plan was to take the money and run.
But the real FBI, working with the victim, conned the con artist.
They had been taping the calls all along. Suffice it to say that
telemarketer is now out of business.

Operation Double Barrel is our coordinated response to
these assaults on senior citizens and others. No American should
have to fall prey to these con artists. If someone you don't know
calls you asking you to invest, take your time and study the
investment. If it sounds too good to be true, it probably is and
don't do it. And if someone claiming to be a Federal agent tells you
to send money in to catch the thief, that person is lying. No
Federal law enforcement agency or State agency that I know will ever
charge fraud victims a dime when trying to get money back. If you
get one of those calls, I urge you to call the nearest FBI office.

Thanks to Operation Double Barrel, this holiday season
will have fewer scams and I hope a lot more cheer for a lot more
people.

If anyone wants more information, they can contact our
web page or they can call the FBI or they can call the FTC consumer
lines at 202-FTC-HELP, FTC-HELP.

I'd now like to ask FBI Deputy Assistant Director Ted
Jackson to discuss the role the FBI played. Thank you so much for
your good work in this effort, Mr. Jackson.

MR. JACKSON: Thank you, Attorney General Reno.

It's a real pleasure for me to represent the FBI in a
case of this magnitude, an operation that we started back in 1993
using the undercover technique. We used it with State and local
officials, with State attorney generals, officers, and regulatory
agencies, as well as AARP and other concerned citizens.

Our concern was the victimization of elderly and others
who lost their life savings from a telephone call. As the Attorney
General mentioned, if it's too good to be true it's too good to be
true. Generally these calls involved a chance to increase your
money, increase your life savings, increased your fixed income. Each
time the victim was victimized and lost all of their money.

They had other techniques, such as reload. In reload
they would give you a chance to get all your money back. They would
sell your name to other telemarketers for five to ten dollars and
you'd just lose your money and you had no way to go.

Through our efforts and the efforts of all of us working
together, we've given the victims a chance to at least go somewhere
for help and assistance when they are involved in these types of
activities.

In telemarketing fraud there are very many techniques
that are used. Generally, it's all to multiply your resources. For
example, investments. Investments, if you really think about them or
you get advice, you'd know they don't work. For example, one of the
most common ones nowadays is considered foreign currency transactions
in the futures market, where they'll call you and say that for a
certain amount of money they'll invest it in foreign currency, you'll
double the results. There's no chance of you doubling results and
mostly the chances are that you won't receive one penny back.

The telemarketers work with each other. They have
networks among themselves and the victims will continue to be
victimized until they reach out for help. So this has been a great
opportunity for the FBI to be involved with other agencies and with
other States.

What we passed out here is a Double Barrel that contains
all the information you could want to know about telemarketing. As
of 1:30 this is on the web page, so this is available to the public,
every word that's in this material.

Around you you will see charts. To date we've arrested
and imprisoned at least 1500 telemarketers. So I think we're having
some impact. The problem we have is, no matter how good we are,
they're going to always be out there and always try to be one step
ahead of us. So as the Attorney General mentioned, if it's too good
to be true it's too good to be true.

What we're going to do now for you is to give you an
example of a telemarketer and a victim in a conversation, so you can
get some flavor for how it goes. As you listen, just picture
yourself as a victim being approached by a telemarketer and what
happens. In this particular instance the telemarketer is unaware
that the victim is taping the conversation and that's one of the
advantages that we have. They don't know where we are or what we're
going to do.

As you look around on the charts, you'll see that we've
been involved in about 38 States with these investigations, and the
word gets out among the telemarketers and they say: Don't go to this
State or that State because they're working there, and that's what
we're trying to do here.

So we'll listen to the tape.

(A tape recording was played, the text of which follows:)

IRA: I'm okay. I couldn't hear what you said.

KIMBERLY: Are you alive? Are you alive?

IRA: Yes.

KIMBERLY: Okay. Now, you've talked to two of my
representatives.

IRA: Hey --

KIMBERLY: Okay, I've been listening to this whole thing.
We are not going to sit here and try to talk you into doing anything
you don't want to do. You're wasting our time. Okay, I have an
executive award with your name on it ready to go out the door. Do
you want it, yes or no? Yes or no?

IRA: Well, Miss, I couldn't hear what you were saying in
the beginning.

KIMBERLY: I said I have an executive award with your
name on it. Do you want it, yes or no?

IRA: Well, do you know what it is?

KIMBERLY: Yeah. You're looking good. Do you want it,
yes or no?

IRA: Well, what's your name?

KIMBERLY: Kimberly.

I was listening to my associates, I walked into this
office, I can't take it any more. I'm ready to release the executive
award, but I'm not playing and wasting my time.

Now, do you want this award from our corporation, yes or
no?

IRA: Are you the woman that's in charge of it?

KIMBERLY: Yes, I am. I handle the VIP accounts. And I
want you, because I know you want this award, and I don't mean to
sound so firm, but I want you to read that credit card number right
now. 5 --

IRA: Wait a minute.

KIMBERLY: Read it.

IRA: Well, I just want to know what the award is.

KIMBERLY: Well, it's one of the nicest awards, in my
opinion, to ever leave the company.

Now, read the number, please, because I have a
corporation that I'm, I'm, I'm handling here and I have to do an
hour's paperwork and I'm going to put my initials on this and send it
out, and I don't have time to waste.

Now, that's 5 --

IRA: 5-2-7 --

KIMBERLY: 5 what?

IRA: Wait, I'm getting out the other one.

KIMBERLY: Okay.

IRA: Are you still there?

KIMBERLY: Yes, sir.

IRA: Well, that's --

KIMBERLY: What is it?

IRA: Well, it's a Visa card.

KIMBERLY: That's fine.

IRA: It's 4-1-2-1.

KIMBERLY: 4-1-2-1 --

IRA: Well, I have to --

(End of tape recording.)

MR. JACKSON: That's an example of one of the calls.
They use pressure sales. Once they get the Social Security number or
credit card number, they can go on from there and just cause a
nightmare for you.

Again, the FBI appreciates the opportunity to work with
all these fine organizations to do something about a major fraud.

I'd like to introduce the Attorney General for the State
of Georgia, Thurbert Baker.

MR. BAKER: Thank you so much, Deputy Director Jackson.
Let me say that I too am honored to be here today with U.S. Attorney
General Reno to talk about this issue. I'm glad to be here as a
representative of the Attorney Generals around this country. We have
also taken a great deal of interest in this whole area of
telemarketing fraud and are certainly proud to be a part of this
announcement.

Operation Double Barrel is a joint effort, as you know,
by the U.S. Department of Justice, the FBI, 35 Attorney Generals from
around this country who have participated, along with volunteers from
the AARP. I think the wonderful thing about it today is that we have
been able to combine the investigatory and the prosecutorial
abilities at the Federal level and the State level and the local
level to deal with this very, very devastating problem.

This joint campaign in my opinion is really serving to
tighten the vise, I believe, around the necks of those out there who
are engaged in telemarketing fraud, the ripoff artists what target
older Americans and many other citizens of this country. State
Attorneys General, the U.S. Department of Justice, the FBI, I think
we all have as a common goal finding these criminals, prosecuting
these criminals, and more importantly, sending a very strong message
all across this great country of ours that you can no longer commit
these crimes with impunity.

In Georgia, as in many other States now, we have made the
fight against telemarketing fraud a top priority. As Attorney
General I have had the opportunity to prosecute many of these crimes.
It is so refreshing as a State Attorney General -- and I know I say
this on behalf of my other colleagues around the country -- that we
are now no longer restricted by those geographical boundaries that we
see so often that prevent us from pursuing these telemarketing fraud
con artists throughout the States and throughout the country in which
they ply their trade.

We now have the ability, of course, to prosecute on a
statewide level in Georgia, as in many other States. But also, as a
result of Operation Double Barrel we now have the ability, combined
with the Federal Government, to prosecute these and to follow these
cases on a nationwide basis. Our reach now is national in scope, and
that is very significant, I believe, for this operation.

Across this country of ours we have talked a great deal
for a number of years about the most effective and the most
productive way to pursue telemarketing fraud. As a result of this
operation, we've seen approximately 194 indictments. We've seen 150
convictions that have come about as a result. I think those results
speak for themselves. We are simply proud to be a part of it.

I want to thank Attorney General Reno today for making
the fight against telemarketing fraud one of her top priorities, as
we have made this one of our top priorities at the State level. I
think far too long now too many people have been victimized by this
crime, and we are not only talking about, in my opinion, a loss of
millions and millions of dollars throughout this country, but we are
also talking about a loss of a sense of security that many people
feel and experience as they become the unwilling victims of
telemarketing fraud throughout this country.

So as I mentioned earlier and will say again in closing,
with the combined resources that are at the table now, with the
efforts of the FBI, the U.S. Department of Justice, with the help
from AARP and State Attorneys General all over the Nation, we are
going to do what is necessary to make sure that we not only send a
strong message, but also that we take action where appropriate, that
these cases are identified, that they are prosecuted, and not only is
restitution recovered but we are also going to send some people to
jail.

Thank you so much for this opportunity.

QUESTION: I'm a little confused on the numbers.
Operation Senior Sentinel began in '93 and went through '96, and then
Double Barrel began in '96? Is that how it goes?

GENERAL RENO: Senior Sentinel began in '93 as an
investigation and it built on that. There were tools used by the
State Attorneys General. There were other initiatives under way. I
announced Senior Sentinel, had a take-down in 1995 in Las Vegas, and
that was a very good beginning. But that was a very small beginning
compared to what has happened since, in terms not only of more State
Attorneys General being involved, more Federal agencies being
involved, but the AARP has done some wonderful work, not just in
assisting in our investigation but in providing sound educational
programs to try to avoid the problem in the first place. But this is
a massive expansion of the original.

QUESTION: But the numbers you cited, are those the
numbers from '93 on?

GENERAL RENO: Jonathan?

QUESTION: The 12,000 tapes recorded, the 800 Federal
arrests, and so on?

MR. RUSCH: The 12,000 tapes represent all tapes that
we've been compiling since the very beginnings of Operation Senior
Sentinel running up through Operation Double Barrel. The numbers
that we talked about with the almost 800 arrests Federally relate to
Operation Double Barrel, which begins July 1996.

As you'll see in the press materials, there are also
statistics that deal specifically with Senior Sentinel, which ran
from '93 up to but not beyond July '96.

QUESTION: So this is the biggest crackdown on
telemarketing nationwide ever?

MR. RUSCH: That's correct.

QUESTION: Double Barrel would do that even without
Senior Sentinel, or looking at the whole operation from 1993?

MR. RUSCH: Even if we didn't have the great successes we
had in Operation Senior Sentinel, this would still be the biggest
ever.

QUESTION: When you say that you're sending a strong
message about this problem, would you characterize the extent to
which you've either dented or crippled telemarketers? Or is this
just a very tiny fraction of fraudulent telemarketers?

MR. BAKER: I think the message is very clear. I also
think the problem is very broad-based and nationwide in scope. What
we are hoping to do here and I believe what we are doing with
Operation Double Barrel is making sure that where we can we're going
to be very aggressive in prosecuting these cases. There have already
been a number of indictments, there have already been a number of
convictions.

But to say we've cured the problem would be a
misstatement. But I do think it sends a very strong message, and
we're all in this boat together trying to address a very needed
problem.

QUESTION: Understood. But is it a tiny fraction of
fraudulent telemarketers that have been taken down now or is it a
significant percentage?

MR. BAKER: Well, I can speak for Georgia. I know that
the problem is very broad-based in Georgia, as it is in a number of
other States. The FBI may be able to address it on a nationwide
basis. But what we do in Georgia is really just dealing with a small
portion of it.

We hope to be able to send a very strong message, not
only in Georgia, but in our sister States around the South, as we
join together as Attorney Generals and work with Attorney General
Reno to deal with this problem.

GENERAL RENO: Mr. Jackson.

MR. JACKSON: Obviously, it would be an estimate if I
said that we are having a significant impact. But I believe we are
having a significant impact because by making arrests, shutting down
the operations, at the same time we're educating the public, and I
think that's where you'll tell the difference. Any estimate I made
would be just an estimate.

QUESTION: Mr. Director, where are these 40 arrests
taking place today and who's making the arrests?

MR. JACKSON: Well, the arrests are in 12 different
offices and it's a joint effort with the FBI and the States. If you
look around on some of the charts and in your book, you'll have the
details on each of those.

QUESTION: Arrests today?

MR. JACKSON: Today.

QUESTION: What are they being charged with and what kind
of prison sentences are they drawing?

MR. RUSCH: The typical charges we use in these types of
cases Federally would include wire fraud, mail fraud, and in many
cases where you're dealing with the ringleaders of the operations who
are handling the money they take in from victims, money-laundering as
well. In some cases we will even, as appropriate, use RICO charges.

As to the types of sentences, our Federal sentencing
guidelines tend to dictate, based on the amount of loss lower level
telemarketers might have caused, what sentences they get. But a
number of the ringleaders of major operations have received sentences
during Double Barrel that have gone as high as 14 years. In one case
we know of one telemarketer, a principal in a major operation, who
received a sentence of almost 20 years.

So part of our focus has been to try to deal with the
strategic dismantling of these kinds of major operations, and the
more we can focus on ringleaders and crucial participants we think
there we're having a significant qualitative impact.

QUESTION: The press release mentions that, because of
the aggressive enforcement, that a lot of these telemarketers are
branching out, trying new techniques. Can you go a little into that?

MR. RUSCH: Sure. Part of what we talked about in the
press release involves the reasons that we went from Senior Sentinel
to Double Barrel. In Senior Sentinel, as the Attorney General will
recall, there was a strong focus on major concentrations of
telemarketers in cities like Las Vegas, Buffalo, and Chattanooga.
Senior Sentinel was very successful in breaking up those
concentrations and taking out some major boiler rooms in those areas.

Those people who didn't get arrested at the time tried to
compensate for that by moving away from some of the scams they
thought were more likely to be picked up by law enforcement. They
moved to some of the types of things that Deputy Assistant Director
Jackson mentioned, these investment scams. They've also gone to the
recovery room pitches and gone to smaller scale operations, on the
theory that if they're more mobile, less visible to law enforcement
on an ongoing basis, they stand a better chance of taking in lots of
money.

That's why it was so important that we expand this to a
truly national scope and go after this on a truly coordinated basis
between Federal and State authorities.

QUESTION: And now that the cat's out of the bag on this
operation, is there something else in the works, since this seems to
be an ongoing effort?

MR. RUSCH: I think it's safe to say that this is the
kind of technique and the kind of cooperation that is going to be
continuing between Federal and State authorities.

GENERAL RENO: I would also add, this is something not
just that is national in its scope, but it is international, and we
are going to be working with our colleagues around the world. I
think we are also going to have to look at what can be done on the
Internet in the same vein, and that presents new and extraordinary
opportunities for us to work together.

As some of you know, we had a conference this week by
video, and this is one of the issues that was addressed and we have
much to do. Whether it be violent crime, which is down now six and a
half years in a row, or other issues of crime where we think we've
made inroads, the one hallmark of our efforts is that we cannot
become complacent. We've got to keep ahead of the game. We've got
to see what they get into next, and we're dedicated to pursuing them
and not becoming complacent and changing to other focuses.

QUESTION: Ms. Reno, if I could follow up on that, as I
recall, there has been a period where there was a fair amount of
telemarketing scams coming out of Canada, it seemed like. I guess
they felt like they were safe if they crossed the border. Is that
still the case and what has been done in that vein?

GENERAL RENO: I will let Jonathan talk on the issue, but
we've had a number of exchange visits between my colleagues -- there
are two colleagues that I deal with in Canada, the Solicitor General
and the Minister of Justice. We have raised this issue and talked
about how we can work together with the Mounties and otherwise.

Jonathan, you can address that.

MR. RUSCH: I think we can certainly say that, based on
the report that a joint U.S.-Canada working group on telemarketing
fraud issued last November and sent to the President and the Canadian
Prime Minister, both countries have been actively engaged in
discussions since then figuring out what new tools we need in our
arsenal to deal with the problem.

I understand that the Canadian Parliament currently has
under consideration legislation that would create Federal
telemarketing fraud offenses, would expand the law enforcement
authority that Canadian law enforcement can bring to bear against
telemarketing fraud, and deal with other types of law enforcement
techniques that will give them a stronger hand in dealing with the
problem.

So we're awaiting those results and we look forward to
continuing to work with our Canadian counterparts on this issue.

QUESTION: Are U.S. laws satisfactory to deal with the
problem?

MR. RUSCH: We took a close look at that in November of
last year and we think that they are strong enough. One of the
things that helped recently was the promulgation by the U.S.
Sentencing Commission of higher sentencing guidelines that deal with
telemarketing schemes, including the ability to get higher sentences
in cases where there are schemes that operate from beyond the U.S.
borders but reach in to try to get U.S. victims.

QUESTION: Can we hear from Ms. Canja about the need for,
say, members of AARP to cooperate with the FBI?

MS. CANJA: Surely. This has been one of the most
satisfying partnerships, working with the Attorney General and with
the FBI and with law enforcement at every level, because our
volunteers have been able to pitch in and be undercover agents
themselves and help record some of the conversations, for example.

But there's something else that we are doing that we feel
that's really very helpful, and that's our public education. We are
throughout our membership alerting them, trying to help them protect
themselves from becoming victims. Statistics show, in fact, that 56
percent of these victims are older people, and so it is a concern of
ours.

What we also found was that it isn't enough to tell them
to just hang up. It's just too easy to say that in too hard to do.
So the first thing we had to tell them or help them understand was
that this person on the other end of the line could be a criminal.
You would not open your door willingly to a criminal. You cannot
just pick up your phone and let a criminal into your house. That is a message we have been sending to our members, and they
have been responding to that.

The second thing we have tried to tell them is, plan what
you're going to do. Have a strategy. Some people are very
comfortable just hanging up. Other people are not, so they have to
say something like: I just work here, or he's not home, or anything
that makes them comfortable. The important thing is to hang up the
phone fast.

Now, if we can work at our end and help people not become
victims and just become very alert to the scope of the problem, I
think we can really help this effort. That is what we are doing at
this time.

MS. CANJA: Well, you know, they can't tell the
difference. This is what is so hard. And their phone rings all the
time, and they are very trusting. Here's something we found in our
research. You tend to think of a victim as being someone maybe frail
or very elderly and, you know, that is not the case at all. It is
usually someone that is very outgoing, someone that really has many
ties in the community, someone that's well educated, and someone that
has some money. I mean, they go where the money is.

But they are very trusting. This could be their
grandchild on the phone trying to make a living. So we have to
change that orientation.

QUESTION: On the Internet, is there any effort yet to
direct, with the number of seniors on the Internet growing rapidly,
to direct Internet fraud, which is also growing rapidly? Or is that
sort of the next phase?

MR. RUSCH: I think we can safely say that part of what
we have seen in the telemarketing area is that some people who've
been involved in traditional telemarketing schemes have looked to the
Internet as another mechanism for outreach to victims. So that's
part of what the Department's focus, along with the National
Association of Attorneys General, has been in developing training and
joint efforts to focus on the Internet fraud problem as well.

QUESTION: In this case, do you have any idea how much
restitution has been recovered, fines, penalties, and so on?